AVID - Earnings call transcript Q4 2018

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Operator

Good day, and welcome to the Avid Technology Q4 Earnings Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Whit Rappole, Vice President of Investor Relations for Avid Technology. Please go ahead.

Whit Rappole

Thank you, operator. thank quarter joining earnings and and Avid today call. everyone fourth Technology's full afternoon, you us for for Good year XXXX Development My President Rappole, Whit and Corporate name Investor Avid's Relations. is of Vice and afternoon this and Chief and Financial Jeff With Ken me Chief are Gayron, Executive Rosica, Officer President; EVP. Officer of a Q&A. and then operating followed business by Ken of will Jeff will our review financial provide provide our strategic overview and a detailed results presentation we We we issued earlier release to prepared this will that our slide on this afternoon refer are a and earnings call. The press for are will currently of our on be and available limited call a ir.avid.com a release and this website presentation website at our time. available on replay

Regulation call certain most presentation. our refer operational to to to measures used management Investor and earnings in definitions non-GAAP release today's this measures and operational and GAAP the contain associated will the the the accordance the of G non-GAAP a reconciliation and call our appendix metrics During information with financial website closely financial metrics. on In for

In presentation statements of today's meaning the Litigation contains Private statements addition Securities within Act the made Reform forward-looking of certain XXXX. during

your and well the statements call these statements. future Actual slide may materially this Our answers occurrences differ as pertain include and questions from that forward-looking results deck as may that forward-looking outcomes. or comments accompanying are they to future on the results or

turn uncertainties risks filed the press will more Jeff with of release For key XX-K With and of forward-looking and call. today start our the to SEC. over with that associated discussion statements information including to see issued a these call the the please I our some

Jeff Rosica

of is hope soon. those met our who for Avid's haven’t addition Head Relations. team him you He yet, strong you I Great, a our the to thanks Investor as Whit and will really of

and progress Ken with taking financial last Gayron everyone evidence support will our year and improving are performance CFO our I'll all the results creation that new business joining the show that we potential we're Along value our believe beginning some plan. strong the of to on which investors. I believe insights our today. according say we've to made thanks call into good that for our So, us for for I provide Avid's are steps

So prepared with me let get my today. remarks started

margin moving improvement. with team on First, stepped was complete on operational I'll initial especially decisive our flow results same offer Overall, that and to team for generation. Senior in the ideal significant did starting after and that SaaS momentum team effectively with strategic three plan. XXXX us profile. crucial demonstrating drive continuing our drive quite the XXXX up a proven foundation early in value. reshape overall revenue and which our progress and profitable well consistent I provide recurring team growth, and improved will CEO past roadmaps XXXX continued built new included EBITDA, the initiatives into that performance we enhances improvement growth. Senior and this and Team necessary business that been the collaborating the We this encouraged ability better renewed forward-looking several quarters our to experience of team what free and to in during has and continued I to is our positive the create revenue is on contribute that been churn of getting business we full is results. enhancing delivery. through expertise prudent continue project focused that empowered Avid important is wrapping leadership transparency expect of and our my future quarters the we're Leadership the I our driving and in been with quarter. is leadership XXXX having our up is observations This progress help better time, the has Since been beneficial higher into strong of role new in the sustainable team enterprise leadership pleased optimism balance and we that media I'm quickly. progress as along we've the that about to efficiency today few to on Optimizing will product Team, both work adjusted meaningful as as will industry We've our a financial Leadership software cash lead strengthening work rapidly. greater delivered am our prospects. seeing, the more already because improvement Avid's we've Today, to re-prioritization shareholder gone work our accomplish, place exactly and Today, position senior way it able aligns Based to delivering the the by plan they've trust CEO, and At put to track model growing I did order ensure to to year have and results. change make business

and positive Now let's putting into to a beginning results. overall are at through quite look the yield performance key changes some we've indications QX that place take Avid's plan the been

of with strong first subscriptions. in our meaningful we a year-over-year our with category really e-commerce quarter line XX% driven in product same from overall X% GAAP First, which QX revenues. from and highlights the of since own sales, grew growth also activities was company's quarter expectations now overall Solutions of growth the It the represent the Integrated particular This were quarter solid XXXX. portion up being early versus representing revenue showing Revenues with contributions performance year growth. major last the in Avid's e-commerce

the growth with in paying surpassing trend and strong its continued revenue XX% subscription XXX,XXX subscribers. Software growth quarter

paying at subscription adoption we're recurring reaching and XX our our users revenues good customers tools rate continuing offering First to continued for a downloads higher X.X be family recurring to last and the with the Our historical industry driving creative into revenues offering. in at year-end, quite averages to of Avid fourth in high Avid momentum these a with than the XX%. the in over premium typical a product premium continued has at quarter million First realize successful the months

the was year-over-year. committed long-term for total slightly grow to While quarters. Gross out driven in strategies, to renewals of several this impact for that continued the controls annual and quarter on value the metric certain fourth mid margin positive timing discounting, quarter, we to have flattened as by a beneficial consecutive was the of the including nearly improved reaching the bookings for a sequential underway expect upcoming continue up reason mix subscriptions but implementing the year, down quarter in since pricing to Contractually backlog and due same contract initiatives basis in software stringent of been continued grow. agreements, on new more XX% fourth last

to these As margins, supply XXXX efforts continued to chain our improvements we see to strategy. into further transition new expect contribute as we during

free of significantly to able cash improved These EBITDA net Our and contribute strong with results were resulted flow underscore the smart from that want financial all progress we and benefits the adjusted quarter cash the And the to margin, in flow continued our lower the I better a quarter execution due the quarter. in us have ensure expected in by to AVID’s we in in years. and strong free good OPEX we're better income work largest which performance savings signs anticipated EBITDA improving to initiatives revenues, but ahead fourth consistent encouraged improved delivered gross of in to deliver and order generation finally, the seven to make helping we and we started than realize the than getting flow. just overall quarterly Due cash performance. and coming our to are lot we're good in OPEX

which Now of our let's was good XXXX evidence to and sequential momentum in year building Avid's turn year quarters. line throughout our three results last guidance. we've in our Revenue made with progress the improvement within hope for full full the expectations and and the is

engine basis. year revenue full revenues total for up continued E-commerce an a a growth XXXX. our we revenue, in that company up clouding growth not the Excluding demonstrated revenue to fast can of business demonstrating billings has software important With growth for when comparing XXXX. XXXX growth part years surpassing GAAP was a return strong single-digit continues in subscription is on deliver to in over year-over-year, two anticipate with X% combination confidence and its comparisons, growing our important business year-over-year taken the single-digit E-commerce non-cash running, the growth and increased $XX million XXXX have XXXX. which XX% revenue of be XX% non-cash with revenue of in which year-over-year we to

by the and Excluding XXX discussed revenue, GAAP versus was year-over-year gross mix relatively better flat basis non-cash but helped of gross for of our XXXX. smart efficiencies was initiatives were operating year improvement the in the impact up by initiatives margin. the at to significant which margin margin various with of earlier through XXXX margin keeping as points non-cash represents an driven down revenue amount savings. deliver was reported Operating expenses XXX% our our

guidance. above improvement for at continued which flat cover later to end in on XXXX to XXXX which will call. of our basically Adjusted expect more high Ken was the in million We our some EBITDA in expenses operating this was detail see compared XXXX XX.X

modest when of adjusted the the the a increase than free than end of the X cash XX rather impact cash perspective, more was year. the prior deliver amount. for EBITDA just was flow removing top guidance. at non-cash under from did which Well importantly Free the X.X the was over cash More year result XXXX was greater of this times revenue, a flow million full our an this

XXXX to to in gains upon cash improving that improve full year evidenced more product and continued faster confident and efficient are our again on innovating in significantly flow the in guidance. portfolio. become our as strategy free Avid XXXX at can delivering Throughout conversion our We make

tools, shortly. available We given average our on deposit performance. factor we more plan performance and our have progress our which business, will platforms, to that that and accurately approach on our evolving to financial our XXXX our that help making will into about And solutions results us also drive are begin followed through metrics XXXX differentiated there talk Ken and believe

aggressively of on our we with with on We focus executing but improvement momentum to continue on positive continued this our year have build to coming will out performance operational improvements strategy combined more plans, the XXXX. deliver the we as accomplish

our of part much and our e-commerce on We on quite keep and further on so will far will the revenue. products to engines based results a we highly building which the profitable, bringing our more delight market our several innovative We'll will to quickly growth emphasis that part our additional provide our meaningful new become which solutions and that and customers engine surprise for fronts, We're for needed sustainable a a be optimistic executing is first Avid. will valuable business has company. continue activities be very growth of expanding

well the of is we smoothly. along Additionally cost, focused chain supply deliver are underway requirements margins, our will in which finishing the and half transition help capital lower moving on working second improve and XXXX. activities of lower beginning This the quite

Lastly, execution we delivering realization savings as and initiatives continue efficiencies as our and of operational performance further our smart improvements. well will

strategy. model its continues a in say subscriptions predictable attention our financial on I'll software and addition In more that agreement growth from recurring revenue to continued more intensify to our management deliver long-term built

continued SaaS also growth market to higher sustainable adjusted moving than shareholder in value are that efforts much and efforts our are shareholders. driving through more goal to to aligned combined to metrics, effective profitable value more flow will none is EBITDA go important much drive margin innovation ultimately software financial and and cash with with greater of our These key create to optimized and We approach. improvements an and on our margin which provide our higher return goal the offerings for a free

So remarks. to with Ken. Ken that I'll turn over to his give it

Ken Gayron

Jeff and afternoon you good everyone. Thank

by improving XXXX with and we improve growth, financial making gross We earlier momentum ended our on return evidenced fiscal margin, are outlined free revenue to a cash strong Jeff year performance. to initiatives strong progress flow. As our

revenue. We we cost our defined adjusted in favorable also flow metrics XXXX. forward-looking recurring and XX our revenue savings improving revenue, well backlog, EBITDA million With and see cash to forward-looking continued achieve consisting in metrics plan of anticipate improvement free annual progress in in and value, contract

quarter year. fourth and get adjusted into gross In now flow revenue, free Let's the the cash margin, details. were ahead of all of XXXX EBITDA, last

cash end for We flow. free for met also our EBITDA guidance exceeded our adjusted and the guidance high of

for quarter million growth the revenue to revenue income of was turning of year-over-year quarter and first Now sequentially. in second up marked quarter our since X% the of year-over-year statement, with the and It the guidance GAAP XXX.X line XXXX. X%

growth Storage We good Pro Tools, graphics. we quarter continued the e-commerce to was were in Composer, for and our the again see by solid and pleased Media subscriptions in for favorable and Sibelius. results

see in to media license our which grew continued progress both year-over-year sequentially. and We revenue central

saw also was component our in issue recovery business remediated. quarter integrated supply We a as last Tools discussed a Pro hardware we

$XXX,XXX million in the been margin of cash recognition quarter was and margin we $X.X in old revenue, basis and standards from up non-cash integrated in is basis hardware license driven sequentially. X% fourth was basis Excluding a which Non-cash with of on of points the products years revenue quarter for up XXXX. XXX.X for down This even XX% Non-cash and quarter higher subscription quarter million to quarter fourth margin margin prior to ratable many recognized products Non-GAAP the revenue XX% points a of XX improvement collected revenue mix our approximately the coupled improvement year-over-year was solutions. maintenance fourth fourth XXXX. up an revenue being that and have includes up consecutive the over software had year-over-year under gross shift was though in XXX sequentially. XXXX by

Our hardware graphics high due basis year-over-year continued margins business. margin storage were points improvement growth to a of XXX and

XX% in the better and quarter operating margin gross internal exceeded year-over-year. margin XX.X the EBITDA compared a million year-over-year. cash guidance XXXX. up of in was EBITDA and driven improved improvement XXXX expenses XXXX transition year-end. contributed in in to of vendor move in related for million million our bonus continued the credit the in free of for hardware cash increase chain on efficiency payment flow forward. chain fourth reductions The and programs. revenue, supply XX.X EBITDA the new of from With the mainly quarter Overall was of basis up quarter The the to good the the Adjusted anticipate up EBITDA driven to improvement our X.X for the million EBITDA for XXX legal the settlement in quarter freight making bonus X.X XXXX, as million $X.X end operating million received the flow $X.X of initiatives X.X progress by our efficiency points year. after expect supply and adjusted down to to Non-GAAP the was in the adjusting quarter in are at was expenses moving in million our Adjusting X.X by in of to pending EBITDA. we balance free line from million second increase the are operating QX Improvement the of XX.X% to which fourth new with related overheads quarter adjusted by vendor see resulted expenses transition from up we improvement fourth last we were XXXX. with million margins plan our operating was true margin, Adjusted adjusted management in and XX.X complete

down fiscal moving for the XXXX Revenue in EBITDA fiscal saw in free XXXX the than our million Now prior adjusted margin, materially year, GAAP performance XXX.X was our flow X% and gross the overall to higher cash revenue, year. and for stability non-GAAP our XXXX, was year-over-year.

The down However, million revenue of was in approximately million was in up revenue from non-cash XX.X XXXX. excluding X% X.X XXXX revenue, million non-cash in XXXX XXX.X year-over-year. impact

which non-cash be financials in is in we revenue material amount a year-over-year revenue the our the to Avid minor equal a revenue now a XXXX footnotes X.X% revenue to will as similar confident in item Since of roughly in disclosed revenue, is non-cash XXXX XX-K. will only non-cash in of the our amount see are to impact not basis. comparative of GAAP growth on expect We have XXXX

our I at in this spent we're our quarters business. new mentioned Jeff we new our a forward core our looking past time single for agreements can video, understand subscriptions looking to Additionally performance subscription to over challenging. of product our less the space we've transparency of think future that products some the long-term the is These Coming sizable is One lot number new as metric me impact metrics that we a should last show growing growth. a results, timing on a recurring booking to as the along foundation in year new be agreements business. the provide lines our have bookings. as long-term with disclosure materially bookings our and to our Due CFO introducing audio, volatile as our in investors. two quarterly revenue our long-term making with business relevant metrics agreement of on what increase quarterly help and for understanding quarterly customers the increasing metrics Based helped build added focus the multi-year comparisons of exciting maintenance

revenue XX but the year million revenue for XXX.X year up excluding with Bookings year-over-year in reporting it. points XXXX. bookings flat for resulted backlog in the China, As said XX.X% Non-GAAP were year-over-year the more Bookings a total Greater investors. we provide for for XXXX we bookings moving our annual contract disclosure metrics since forward software wanted time result value that to as on and annual number metrics additional I the backlog, year down to was XXXX. of over provide such With ACV. gross GAAP add revenue companies over forward-looking XXX% basis in were were focus will of to increasing recurring improvement transparency which and started margin relevant revenue, XX%

saw in XXX% in point the when revenue non-cash benefit gross increase which XXXX. you XXX gross basis exclude we has from margin However margin

down margin Non-GAAP for we the have transitioning improvement million software we fiscal hardware subscriptions down our progress from visibility expenses X.X after XXXX. improving exceeded publicly announced EBITDA T&E in million about areas in XXXX a million in legal X.X settlement our down facilities, consulting continued fees decline EBITDA results Avid's and such guidance. XXXX balance million XXXX million with to from operating were X% Adjusted received in than high internal as non-cash gross margin XXX.X XX.X inclusion credit million reduction higher in Free from services, guidance. in from are flow the XXXX a OPEX programs legal in million of and optimistic and our in in and Given XXXX from million X.X for XXXX X.X The in XXXX. was from million X.X cash fees operating XXXX. X.X adjusting primarily for efficiency X.X of margins, XX.X Adjusted more the revenue FX. of the of point was million outside of

to more Now revenue you steadily can moving see as revenue, of in the is with has confidence the providing percentage recurring of increased our us our business. predictability recurring that

from XXXX, ending of year XX the With months earlier. a was XX% revenue our December XX% recurring up

We growth in the to increase revenue and given expect over seeing we continue agreements. time subscriptions to long-term recurring are

removes forward. LTM as our the By plan use shipments we moving under in not of to methodology seasonality revenue quarter LTA. reaffirm recurrent XX% to LTM three point goal will experienced and products the more our do it out have two the we quarterly reaching fourth presentation modified reflect We to of LTM business recurring in years. want to typically moving we that I to revenue

focus over long-term has year-over-year ACV from Now million the turning and strategy end prior has subscriptions the on ACV driven XXXX year. of to this shows margin increased our XXX to XX% also grown annual software graph agreements. up higher to contract at value, our

the sequentially down long-term of the in has over was agreements our was our long-term the agreement towards of of agreement and certain signed not In expect enterprise that particular at ACV We subscriptions. there quarter that continued ACV million time new strategy purchase fourth to to one end timing to first agreements. $X that due renewed shifted given end growth the and was the of At more strategic one been XXXX XXXX. quarter now see

if our categories which XX% on to the margin from licenses which in to of renew We refinement calls this that threshold detailed purchase our we this are our the subscriptions plans last Avid's our with quarter. to of both two includes we renewal discussions strategic introduce still achieve partner aligned a of more was a provide revenue revenue software agreement revenue are we desired On streams and business discussed perpetual today. better maintenance XXXX our and into licenses In view revenue. may and

modestly revenue revenue gross XXXX plus. this we expect perspective non-cash to maintenance to had grow resides lines. reporting GAAP XX% a fiscal continue category to the From in We margins software perpetual produce of continue in our and and

had Excluding $X and growth from software in the million licenses non-cash revenue to and ongoing despite we revenue transition maintenance perpetual subscription.

driving offerings, on leads subscription the should revenue focus we more XXXX to have perpetual and of me license XXXX. see continue we growth licenses did stabilization we to in second Although that in in software more half maintenance believe and

revenue portion we which our gross where contribution business better SEC which increase services professional with of we the will filings margin were internally with of the new our XXXX. and of Moving which view of our comes our in the high in business in XXXX generate audio the start margins. vendor expect we into in will presentation to our XXXX the continued software will moving using and chain margin first balance the is We area in hardware believe of the attractive forward. this supply roughly The and our see to improvement from line driving and gross XX% programs starting a new forward. fiscal margin video These to next introduction high products gross revenue of solutions. hardware revenue value, transition from quarter revenue strategy smallest to combine the comes Again provide solutions integrated moving

vendors first cash quarter XX, of million in sheet, of XXXX excludes XX.X is and chain X.X cash. the favor the our to in the as restricted of The million. Moving balance in XXXX December of one supply balances reflected had we letter issued of balance credit

XXXX XXXX back chain cash, $X.X we cash cash restricted is new beginning at quarter vendor XXXX in XXth. as and over December X.X million XX.X that million to as restricted September XXXX and were million our up due the We million XXX from XX, our XX, cash with the half an the XX.X XX XX.X making unrestricted transition quarter. from come of at the the at second XX, million of of supply Including be accounts days basis. the time. expect our up up of the million XXXX billings timing back December from increased on to adjusted DSO to will $X.X December September XXXX up ended receivable ASC XX, to weighted We that more towards the

from move to back to our in million to new balance from first to chain due XXXX to XX, XX, XX, expect to see DSO product September was up XX's on X.X releases ASC flat in year-over-year relatively adjusted planned at and into revenue we half vendor XXXX. expect million XXX We an the our XXXX XX.X continued we as XXXX sequentially December basis. the mid the XXXX but and was million at increase supply XX.X Inventory December normalize Deferred transition. up the an

past was deferred annual quarter. XXX.X committed XXX backlog has over in by of or million basis. as we've on maintenance grown to our a similar fourth significant built and the year XXXX expected in fourth patterns portion XX million X% quarter adjusted at revenue increased the December Contractually a As of historical revenue the XX.X

refinancing of the and first to now company, capital structure strengthen a our harvest aware shareholders. to reevaluating from XXXX was near-term to significant we of continually under our We establish that amendment achieve covenant notes. Our during XXth. by address repurchase the long-term for flow, remain working million opportunity, end was outcome and introductions quarter in for prudent were more and of objectives from confident these contribute leverage due Long-term we manner to accretion the million by debt was to company business in is I'm revenue to of the LTAs. continuing May in compliant million we quarter are revenue. free required XXXX increase offset our provides XXXX. see ability the down loan of with as debt in more long-term at year. the asset the the QX given remaining to notes the cash apprise in due XX, XXXX. by balance intend backlog a in $XX offset million Adjusted of of At bonds ratio it term being the moving focused deals add June our XXX.X to to in delay Debt that We brand, value cushions we in on and September the And significant the September opportunistically convertible short-term in down notes to and due repurchases debt backlog our maturities the at additional alternatives $XX convertible reduction year-over-year covenants. signed a reduced market slightly signing the product with is the forward. of convertible mature the that and new Total our was X.X up EBITDA, should the backlog end drawn and finally quarter fourth the the a best have convertible

However will plans. sharing comments structure at be making our this information on on further not time we capital more

for the fourth X.X we was achieved quarter flow -- is in the quarter of of cycle Avid cash payment normalizing year the cash flow high for flow, off the due XXXX for was guidance source our is turning for fourth the cash consistent quarter fourth of years. up the X.X EBITDA. fourth year. After XXXX, is the free fourth million a X.X quarter maintenance bonus cash in which typically strongest This XXXX million capital prior in improvement of seasonality flow cash to of free over of adjusted in free the quarter with cash the to quarter Working the flow million free point seven Now free the in with in billings.

a you for year was and With capital compares let's cash bonus to when payment. source QX to review For million X.X full quarter of fourth guidance. source of the turn in a XXXX XXXX the X.X working of QX normalize of million which the that

expenses As we At margin are exit are since At revenue quarterly operating strongest time expect consecutive are XXXX, of million quarter including the we in free million. flow our progress first GAAP non-GAAP of operating of XXXX guidance be growth XXX to revenue with that providing and this helping cash quarter momentum lower first this proof -- first good making. the to million forward-looking sequential points year-over-year XX initiatives four pleased In continued quarters XXXX. seven the we the gross we metrics. we're quarter early to for improvement, and between internal $XX following the our years, with improvement

quarter accounts X to Our we expect million. for EBITDA But lower year-over-year the XX of fourth first In revenue of quarter adjusted XXXX. is than and quarter decline. we of maintain growth first expect the seasonally the the first between which for million quarter sequential XXXX

Day reaffirming also guidance XXXX in XXXX. November We at Analyst year we our provided are full our

revenue million. XXX guidance XXXX Our to remains XXX million

Jeff that million our guidance guidance million call to free XXXX EBITDA closing Our the like XX flow cash With XXXX to I'd remains to commentary. remains million, XX turn back million. adjusted XX to XX for

Jeff Rosica

Alright, thanks Ken.

thus we're continuing performance better XXXX. Management focus financial business So shareholder we're excited deliver remains in and enhancing our will opportunity committed on -- to and value. and to excuse me excited about

larger the We resulting business expected External potential types customers. to wallet creation, all deliver business on growth continued in our need consumers strategy risks. will share us. which the and on accretive our media technologies enabling believe These is software maintain ability with to for products focus we industry in our including ongoing adjusted as increased concerns of consolidation EBITDA growth and new requires flow on growth solve innovating and The our our continued expenses overall in demand improved industry will delivery are improved improve suites. and free XXXX. performance e-commerce efforts our the The technology business and capture reduced by subscription the includes benefit content growth, revenue management, margin, pose problems macro consolidates, opportunity. industry in and But media the operating focus improve the enhancements media our the they globally, innovation of to continue disruption factors cash continued generation [indiscernible] to content innovations to with intense in margin and gross their that to

the the we progress the the during some several will which information its our host has about month as community XXXX lots over I will at take of our especially Avid move through if the Customer these to Avid event to Even industry grown technologically. work growth in industry. We energy our month new plan XX,XXX XXXX collaboration after the forward way the Next largest Avid and We you Annual product of and you events Association with will hope you'll to profitable sustainable of Xth Conference innovations unveil new the build of introductions activities further the opportunity April. in we industry NEB second Connect members. the be is and of to Connect as year. the the can't that our half year. and there of see we will witness customers help anticipate Show, surprise delight Right by

financial to on continue industry of enable We drive done smart Avid continue differentiation. results. to further the will our that growth also the improving to keep will operational better All with at teams execution unique investments innovation needed enhancing this Avid's to make R&D and leadership as is the forefront future drive focus

back turn call to So with that Whit. I'll the

Whit Rappole

Thank have take ahead. you we and to please concludes happy Operator, prepared now go remarks our your Jeff and Ken. That questions. are

Operator

Thank you. Instructions]. [Operator

go to with first Samana will Samad Jefferies. We

Samad Samana

more color for it of think idea these going different it is -- company the something good XXXX. maybe our questions conference new want on afternoon, to thunder get, us markets, maybe end, to prices from and to finish new but some the based and just about if be opportunity, my the subscription new moves will expands steal and give pricing soon, where I nice to think I helpful? any you're coming for questions, Few it direct a maybe first be and thanks could don't is SKUs, Hi, are into the mentioned know how your trend market I taking upcoming to that us products you focused help a continuing

Jeff Rosica

I unveil maybe this to sure, the I'll Yes obviously the want event. a save We are. I remarks, for little don't that in it be I to say it. what want will products so hinted because the to about crisp more

are Tools. to iconic creative going products our suite, tools You some out like Media see Pro of some and things our coming Composer of

that and in to improved coming us to expand the really think new us some of business. will includes vastly and see some It it's give will us also things opportunity show that area, offering out that interesting for SKUs. going subscription give the on help You're products we that going

some products number about exciting. cloud to to and at of to engines XX last Microsoft, the our give with to major are pretty going general, with in help been that of for company. there partnership then show. innovations And as our said one SaaS be talking help that the is on really unveiled we us will be and And areas have -- with going us growth also will add to be additional SKUs a them new our to continue We months are expand us I be around working going

Samad Samana

for of company maybe the part and then executing curious a The internal ahead the the tracking good was and I Analyst of some it Day. of targets maybe guys Great, against you done at initiatives has are couple a provided just job like operational Ken. the of seems

what more could that of there wave a you of room and we are on about do you sight efficiencies, the you million synergies As much and ultimately can you there's line any do XXXX, of drive? to drive think to greater next a how be think additional provide XX examples cost think that us of have

Ken Gayron

will I so Day. slightly Yeah, the say Investor that we that provided of the plan at are ahead we

have identified a half, rate million. from second over of $XX $X P&L run million savings the of about slightly the in so basis on initiatives X.X million We our

by cost that spend is rate first once should there first OPEX next quarter $XX end some expect our initiatives is side, are continued which achieve million side sales quarter. supply XXXX benefit able the transition that OPEX towards quarter will the run and be but of of We the the the of savings completed. end the the the chain to on will do the the supply on in of that the that So transition. of chain we benefit on most of expected be we're is wave starting we The the second driving quarter that improve occurred in

main looking that point, $XX we're this to. the the we're forward are those really So items At million. on confident

As we progress, program. we'll $XX more but make committed this we're revisit at the number million point that to

Samad Samana

just visibility deals I terms then, guess and create around from thanks, that it is lot or of how how just guidance the taking volatility is enterprise slipping, timing I in helpful on about that model I we think much or factor factoring impacted at you about back high models for into that of how -- guidance, how as that you there as think color level year? our that a the given -- goes, deal in the looking a as much guidance think is you a can much and ACV. our guess maybe Got and many and factor in there moving you've how as the and into do how today when XXXX, far step potentially deals often you

Ken Gayron

is very started I the in so have in backlog. revenue ACV revenue in what XX into visibility terms terms $XXX should of year would mean, is I we we roughly million we about Yeah, with in. $XXX The backlog the good of million, year months. that say start turning that come as

we revenue kind with. the start the to in year I So, of XX% feel good of about XX% terms what of

get visibility. go you we quarters, the into As more

given of backlog we it's we quarter, have whole are year QX guidance cash for deals team more but about new kind on products would say XXXX. for of visibility QX, start there slip revenue the that teams kind yearly are that's we and feel working the I where could XX% that that coming last given really the where So for the like of so saw XX% And as we guidance, certainly the and momentum then quarter-to-quarter, into the has we good have. our start kind I think out. really year the growth the our year, the going yearly we deals the

our guidance results we the about is XXXX. excited have like feel I going achievable into So really and I'm

Samad Samana

the about you the well. pretty end customers pulse just spending spending Great, taking [ph] for Avid with looks for and do just what think staffers most from is And for the and then markets? a end guess question when it last Jeff thanks me you, questions. my I and again how market for curious macro view environment I'm like

Jeff Rosica

Absolutely, no problem.

there way losers Because around well. that deploying So and is there's going on up holding people platform to overall driving like things better a central much proposition I for macro have look and industry consolidation is efficiencies really as actually efficiencies. it's are consolidation and whole obviously, do we Avid at in a guess think well. manage up trying look operational that always I an us, operational quite level our There it's pretty strategy whole for pretty winners that's any our overall holding the pretty all consolidation does concept obviously us when on perspective through are from what and for I say And can thing. progress to the unique good but media and with we platform of a help to enterprise has company companies

efficient requirements, more we help that solutions create we of general -- for just companies one and how plays we've that. us very the efficient well do in because to we're enterprise got operations us So media have who media a how companies really set that much because workflows, more are for them helping of around help

on one I think side. it's So

and creation solutions that production helping is generally content also a is creative but our teams pretty creative just everything Your so rapidly from tools side we continuing to that really and the is sell teams. of us lot around grow around

So still creation it's in pretty a content general. in vibrant market

Operator

we'll And with & Dougherty next to go Frankel Steven Company.

Steven Frankel

tell to you're from going a volatility. QX of has That unless me was said, about period want because changed Good afternoon that big away and you your business quarter-to-quarter to I business. get bookings bookings for typically know talking

slipped lot start way customers the out of was that your year-on-year, much a one maybe customers bookings end and that some the that down ex-China headwind tier Your tended quarter XX% general, there? I buy in deals see to demand versus how two of with

Ken Gayron

Yes, two Speakers] component so decline, say deals large large a when of decline. -- the [Multiple are component a two it's XX% that you I think components, of the

Steven Frankel

bookings? ballpark two for what give would you accounted Would what for deals in accounted those have and

Ken Gayron

which already one million signed is $XX of Roughly in QX.

that we for because the threshold at buying it right our at list us was And other the better now are price for that re-sign wasn’t shareholders. full it's The margin in one we margin so customers made felt not to decision QX.

this point So in our with still we're at discussions partners.

two So with $XX million events. those it is just of

it us part in year the in QX that on bookings and of headwind And of XXXX. they bookings to fluctuations renew was when in number. signed for multi-year maintenance have is it last quarterly and for Again, occurred the other you agreements they QX so there bookings. didn't be a terms going that SKU a that The in is were multi-year numbers few happened and

key focused could fluctuation as we're our ACV. We and recurring improves looking quarter. that could that be focused backlog kind revenue, of every creating forward-looking There that a metrics quarter quarterly on why on more is backlog a in be at are

look metrics I should that's judge we're that how And we're we investors. doing forward-looking the Jeff and think on think positioning kind -- a at how to that's be really we how basis. So communicating to our I of

Steven Frankel

down am product in understand were million I were QX? I unless maintenance almost but stronger product But XX down, bookings year-on-year looking bookings to multi-year

Jeff Rosica

they're -- quarter-to-quarter more was these two a between treated a careful and as in of long-term within agreements looking now those is you and been a some moving there's to the We've bookings average have years, to correlation for I because for I business to the no anymore agreements large bookings we've the proxy we've a are no lot you thing Jeff. know been little couple as of agreements. -- is the lumpy at basis two of be they're years years The with Look add on know about long-term our in by longer revenues. this maybe can three ago this nature of and Steve, moved So, direct on color Today quarter. talking multi-year. a

have bookings I'll number look we at isolated just to going bookings the say this, that's a of we basis full things the when And at an as a you proper period get in XX came-in day the in do the not product to right delivered. were the regard. picture what's delivered that on comparison basis if And couldn’t obviously to we result year why did. you're the that result that look so on, like going in the because The from LTM quarter for bookings of billings strong been we have down quarter or

Steven Frankel

done on customer you last the the and relative different agreement year, the metrics quarterly update signed has that to goals goals? annual that how that put in how agreement, Okay, about an subject, were China

Jeff Rosica

that the [ph]. the of relatively does well one business including their we had rest know that the but partner the enterprises, did we needs -- in our has one for far two up does One individual in tier one the CCTV met partner that then a and as for level The the market. business near-term the call country that The little and music doing a business one performance miss creators the tier the see So, getting tier example. very, of we the level actually general very partners there's three well audio one and business does one made general in of tier you in bit here for as And that know, as in big market and there. did year. China business the

so far progress we're -- happy us. concerned the and not we're results about So with market of the that not for we're

Ken Gayron

revenue above our for EAs minimum XXX%. our aggregate SPAs in and And were commitments

over people commitment. more as and of So our put sure generally in the want terms that to XXX% average we XXX% ACV to make what than in XXXX% I they deliver always in, we just commitments typically order

Steven Frankel

prepared among customers your one I the tier Okay, demand you some I during could remarks clarify think bit? little great. a And and you perpetual heard comment make about that

Jeff Rosica

is perpetual that has early very in I mean obviously not of starting, enterprises And the large us subscription agreements. yet It big in have is those the move that's there we subscription a is kind sign in that you lot who to are media going general EULA subscription, a with on Steve. customers stages, basis. think an from obviously to really as happened of we've business subscription some enterprise the to handful I of signed Well, much just a that companies to know, started

call teams is actually starting enterprises, come, just during officially to formalized a program individual and see a we for what licensing we'll us subscription the will XXXX where we have subscription creative. launched So from not being enterprise

think -- just the I the see remark from move about was in we perpetual perpetual So how general subscription.

software central own. held the strong about So far from really that well. And a mean and its strongest will is data that subscription share it's see for the can since had the media I it very our is media that I also XXXX. actually has product revenues really pretty growing platform information has the so the say been that that talking central may QX fast and it enterprise you was kept platform, quarter you we've can have

Ken Gayron

a We the good rate over the the very was had Steve in QX platform QX revised XX%. growth we in that on central introduced And platform and media was July. that

today. So all that's licenses perpetual

has lot growth media it a that comments perpetual my of we from essential have. So, that is that stabilized,

Steven Frankel

flow XXXX, the and might seasonality next think year on ratable terms cash recurring in your then a that, more going of is for guidance or we given in free of year? how cash through come of great revenue about basis to the flow principally QX free more Okay, should see we that

Ken Gayron

it of You'll first terms year QX half more of But in free should every better across better this than flow second because flow to most last cash the just better have the weighted be really will expect to quarter. have towards and see EBITDA more geared of of the more free profitability but cash half. we year cash in performance we

where Although improvement we XXXX away from right know QX year. we ended in you last expect

Steven Frankel

And just over bonus clarification payments year? because a moved made this QX it's be in couple last around the years, will

Ken Gayron

We're in and actually going is in it -- them QX to half our spread QX. of to plan half

Steven Frankel

great. Thank Okay, you.

Ken Gayron

more I provide would our That what plan. the that's cash call flow out will streams, smooth

Operator

go we'll Khorsand And next BWS Financial. to with Hamed

Hamed Khorsand

about just industry? Hi, clarify? front could your in got especially on you're talk broadcasters you the customers what ordering so have couple you in these first you just activity to quarters or You of M&A seeing enterprise from if the now could regards last studios do

Jeff Rosica

a year, on generally say we the Well been enterprise one better well. seeing that been Last general versus The We this tier couple tier improving we're of quarters say has I'd one for saw let business of trend or can in tier prior use quite one. enterprise it's so in in kind interchangeably called you business much situation that QX. recovering me us. that

trends. improving seeing we're standpoint that from know you think I So

the bigger mentioned of the you're to companies. as mergers broadcast assuming had you some I'm of acquisitions, far the deals the of mergers As referring media going some on,

saw Avid As position of in footprint fairly earlier, is I platforms about a And you operational customers helping our arrive got synergies. pretty these because Steve said most as we've companies. unique to is these in big

they're and So infrastructure for a meet really companies them way at them come when consider how platform operational and we us and bring how you actually lot allows central new And merging them in synergies. together. going to a work their of they can company create these to to position, this us a help look as helping at really or opportunity media facilities is is the an with efficiencies as know often look our

closely. acquisition but an it's far it us, again would they're these to out on pause flushes So, for moment. quickly. for if a big we got been so they this good of scale But sometimes say watch some the very, very will that stuff pretty I generally doing Obviously activity grand companies a

Ken Gayron

competition content around I'm pretty sure industry a read of competition on in creation, paper. a you and quickly there's every lot moving day is as of services the OTT that about so lot The

really disadvantage a they any do. if long them so competitive be And of are pause just in because they'll can't quickly. Things they that moving too

Hamed Khorsand

one? then are in is catch the one QX, is you tier you tier rebounding making from And what or up that that comments saw normalized QX about in

Jeff Rosica

better year. the was prior QX it Well, than in

for I the saw say year it's would we So in the QX. trend better than prior

in things Just a little XXXX. hesitation think think I early and of two XXXX one do is there in I general there's helping was that, bit

kind see creation we secure the what's on front XXXX. completely bit. gone cautiously important is business, some of like to I continuing QX that it's one and now hard of in think we are that in it's quickly. Obviously content on it's front but Avid driving specifically pretty studio tier happening been the subsiding talking helps Netflix us. I hesitation subsiding. pieces wouldn’t pretty the a is about but We've actually little able we QX someone in optimistic still say moving are pretty right and for things

Hamed Khorsand

to could that chance making QX you just down statements are during you And but million. guidance a clarify $X there's guys the here, your could said be expecting were implies be they you you up

confidence? that in commentary kind numbers the of show that when confidence don't So the why

Ken Gayron

Well of say a risks. we more that of the and to I we're range would that but showing I just think you'll terms see I'm But if get view how in confident it's you we a going range purposes managing midpoint look just just in up show at the we're for midpoint it.

Hamed Khorsand

it the think down mean what's Again, going what's that get I could signed? not so you be year-over-year, risk to

Jeff Rosica

lumpier. business that's point as a one going on on I is we enterprise cautiously growth obviously full year optimistic, on XXXX. shown I lumpier mean it's a basically are think tier really is this our all timing. said to that optimistic a We've key we but Look metrics. just have about I optimistic think guidance At positive business,

and guidance shift we're quarter careful trying would in this, can as tell our if of slip have I'll continuing rather are contracts something another. just And on right to giving in the be quarterly get for on one trying I we we're the economics and wise be we're timing guidance tier to quite company. the still to are negotiation, we negotiations one because giving we're personally very accounts to trying contract so improve to outcome how prudent you interested relationships our and And

prudent year. agree about said Ken I -- but progress to so with we're that this but we're I that being are And feeling going obviously things think how good

Hamed Khorsand

thank Okay, you.

Ken Gayron

Hamed. Yes, thanks

Operator

our for remarks. the closing any over hand to back speakers time this additional I or will call At

Whit Rappole

for remarks our you soon. concludes to speaking much Thank We you forward That look today. again very to good all and evening.

Operator

today's your does you for That conclude We participation. thank conference.

Avid Technology (AVID) 14 Mar 192018 Q4 Earnings call transcript